Change course on land or face grave consequences

07 May 2008, by Admin

8 May 2008

Land reform in SA is in trouble. Be warned: this is not just another policy issue in which government capacity is unequal to a difficult task. This is an issue that affects the very foundation of our 1994 constitutional compromise on property rights.

For most South Africans, the history of land is one of pain and injustice. People must be fully compensated for land and assets that were stolen. At a time of rising food and commodity prices, the future of “the land issue” will affect the country’s ability to reach its economic growth targets, produce its own food, and compete in global markets.

Land redistribution is taking place far too slowly to meet the expectations raised by the government’s target that 30% of commercial agricultural land should be owned by blacks by 2014. In the three years from 2004 to last year, state redistribution of formerly white-owned land to black owners increased by less than half a percentage point, from 4,3% of commercial land to 4,7%.

The restitution process has successfully settled almost all urban claims but is now seriously bogged down. The last phase of restitution — dealing with the biggest, most difficult rural claims involving many thousands of people — has resulted in large swathes of productive commercial land being placed under claim and therefore effectively frozen for years to come. For example, according to the South African Cane Growers’ Association, 50% of all cane land is under claim with only 4% settled; nearly half of the timber land owned by Mondi is under claim, as is at least 17,5% of Sappi’s land. This means that farmers cannot borrow against their land for the next harvest or any machinery or improvements; it means that aspirant new black farmers cannot get bank loans to purchase this land.

There is no prospect of meeting this year’s deadline for completion of the restitution process. Without bold intervention, significant parts of the rural economy are set for decline.

Most land reform projects involving large numbers of people being resettled on newly acquired land have been abject failures — in the words of a senior official, “assets dying in the hands of the poor”. The government now admits that 50% of these projects have failed to make beneficiaries better off, with many other observers assessing the rate of failure to be considerably higher.

Attempts to improve security of tenure for black people in rural areas have made little, if any, progress. This applies to communal land areas, as well as the rights of tenants on commercial land. Many voluntary initiatives in the private sector have been aborted or put on hold because of the scale of restitution claims now gazetted on private land and delays (lasting years) in resolving them.

Influential officials and politicians have begun to look for quick, radical solutions. The land affairs department is encouraging municipalities to levy very high rates on farm land to make it unaffordable for established farmers to stay on their land, thus pushing down prices. Parliament is considering an expropriation bill that will expand state powers to buy land at below market prices, without owners’ consent, and undermining owners’ access to the courts if they object to being expropriated. Citing Zimbabwean and Namibian examples, the department has suggested that the government should have the right of first refusal on all land outside developed urban areas and that without a certificate indicating government’s lack of “present interest”, such land cannot be sold on the open market. Imagine the delays, the potential for corruption and patronage and the effect on land markets.

Without producing any facts, all these proposals assume that the main obstacle to successful restitution is white farmers demanding unreasonably high prices to delay or subvert reform, while enriching themselves at the government’s expense.

But the results of extensive research on the operation of land markets throughout the country, looking in detail at property transactions in areas subject to restitution, do not support this assumption. There is no consistent upward movement in the prices the government has been paying to settle restitution claims. Prices fluctuate depending on the type of property bought. Some recent claims on large and valuable sugar and fruit farms have been expensive to settle, but overall restitution transaction prices increased only by 1,1% a year during the period from 2003 to 2006. The evidence simply does not support the notion that restitution prices have been unreasonable; or that white farmers with land under claim are systematically taking unfair advantage of land reform.

Numerous reports from established farmers all sound the same. For years they struggle to form partnerships with government structures and resolve land issues voluntarily, often making generous offers of land and continuing post-settlement support. These offers are rejected and eventually land is bought by the government. But then officials do not know that agriculture is a seasonal business and acquire or move people onto land at the wrong time of year; or land is not allocated at all for long periods, and when eventually allocated beneficiaries receive no support from the government. Beneficiaries often have no interest in actually farming on what is highly valued and scarce agricultural land. There have been several notorious disasters, when restitution beneficiaries have been effectively abandoned by officials; and the destruction on more than one formerly productive farm has been compared to a “war zone”.

Some new black farmers who have benefited from land redistribution and are finally starting to prosper are now finding their new property under claim as the restitution process proceeds in isolation from other policies. In some parts of the country, black farmers are angry with the state because officials have not finalised the process of granting them freehold ownership of land and have done nothing to remove illegal squatters from the land.

The slow place of processing and settling the remaining land restitution claims appears to be largely attributable to two factors. There is a deepening lack of capacity within provincial and national state structures to engage constructively with private interests, manage post-settlement support or even spend the money allocated them by the treasury. About a third of posts, including senior positions, in the land affairs department are vacant. Many officials know little about agriculture. There is a serious mismatch between the value of the land under claim and the restitution budget. In 2008-09, the department’s total budget was R6,6bn. To put this in perspective, just a handful of claims on valuable coastal land could cost R1bn to settle.

The amount of money, skill and engaged political leadership required to deal with land reform is far greater than the government or African National Congress originally assumed.

If future land reform policy is based on mistaken assumptions about what is holding back progress or descends into a search for “scapegoats”, SA could drift into some very negative consequences. A combination of incorrect, racially tinged assumptions behind policy making, low budgets, and low capacity coupled with ambitious targets without any realistic plans, all start looking like a “future too ghastly to contemplate”.

No one should underestimate the importance of the rising accumulation of difficulties with respect to land issues and the dangers of current trends in the policy conversation. However tempting it is for urban political or business leaders to ignore what is happening, this would be a grave mistake. SA needs to reassess what it is achieving and how best to make progress in the land arena. A great deal is at stake.

 

Ann Bernstein is head of the Centre for Development and Enterprise. This article is based on a CDE report, Land Reform in SA: Getting back on track, which she co-authored with Jeff McCarthy.

 – Ann Bernstein, Business Day

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